ANALYSIS-Scandal blow puts Indian government in danger

* Singh has considered quitting, but not likely to go

* Two key events ahead: state election and parliament
session

* Coalition partners could desert Congress if seen as a
liability

By John Chalmers

NEW DELHI, Feb 6 (Reuters) - There is no clamour for
an early general election in India, but the latest blow dealt to
Prime Minister Manmohan Singh over a massive corruption scandal
raises the risk that his wounded government could fall well
before its mandate runs out in 2014.

Singh is unlikely to quit following last week's Supreme
Court order for 122 telecoms licences to be revoked, a deeply
embarrassing ruling that accused the government of "virtually
gifting away an important national asset at throwaway prices".

According to Sanjaya Basu, a former media adviser to the
79-year-old prime minister, Singh has seriously considered
stepping down at times during the turbulence of the past 12
months but has plodded on out of loyalty to the ruling Congress
party.

Few really know the prime minister's mind. Indeed Singh's
public silence on many matters is the butt of internet jokes,
one of which has his frustrated dentist telling him: "You can
open your mouth now, I'm your dentist."

Even if Singh did go, he has several ambitious colleagues
who could step in to lead Congress into the next elections,
hoping that they can shake off the unpopularity that has closed
in on the party since it won a second five-year term in 2009.

There was some rare relief for the government on Saturday,
when a court cleared Singh's interior minister of signing off on
the sale of the mobile network licences, which may have cost the
public exchequer up to $36 billion in lost revenues.

Buoyed by this ruling -- which kept the blame for
short-changing the nation from spreading across Singh's cabinet
-- the Congress party is most likely to try to limp on, just as
it did through 2011.

Last year it survived the detention of a minister over the
telecoms scandal, country-wide protests over corruption,
flip-flopping by fickle regional parties in its coalition, and
dismay over a policy paralysis as economic growth was skidding.
It even blundered into an embarrassing legal face-off with the
country's army chief over his date of birth and retirement.

The question now is whether it can ride out 2012 too.

"BETS ARE ON"

Two looming events could decide that: the first is a
month-long election in the politically crucial state of Uttar
Pradesh that gets under way this week, and the second is the
budget session of parliament in March.

"Ever since the (telecoms) scandal blew sky high in October
2010 ... the regime in Delhi has acquired the traits of a rubber
band that stretches and shows great elasticity but is yet to
snap," the current affairs weekly Outlook said in a cover story.

"Everyone's waiting and bets are now on as to whether this
government will survive the budget session," it said. "The
Manmohan regime may be too much of a liability for regional
parties (in the coalition) to carry the burden for much longer."

Congress is expected to fare better in the Uttar Pradesh
poll than last time, when it won a mere 22 of the state
assembly's 403 seats, in part thanks to the tireless campaigning
of Rahul Gandhi, scion of the Nehru-Gandhi dynasty that has
ruled India for most of its six decades of independence.

But if there is only a modest improvement in its seat tally,
Congress will be further weakened.

This may encourage the main opposition Bharatiya Janata
Party (BJP) to go on the offensive. Coalition partners that
Congress relies on for a parliamentary majority could also be
tempted to desert it during the budget session in March.

If the government fails to win enough support in parliament
for its 2012/13 Finance Bill in mid-March, then, under the
constitution, it must resign, which could trigger a mid-term
election.

"How many members of parliament want an election now?
There's no mood for it. The BJP doesn't want one because they
are not sure that they can come to power," said one political
insider, who asked not to be named. "But accidents can happen."

One coalition partner that could be tempted by an early
election is Mamata Banerjee, a firebrand who leads the Trinamool
Congress party. Congress relies on the 19 parliament seats that
Banerjee's West Bengal-based party brings to the ruling
coalition, the United Progressive Alliance (UPA), but at times
Banerjee has seemed to be its fiercest opponent and there is a
risk that she could pull her support from the government.

If that were to happen, Congress may turn to the Samajwadi
Party, which is expected to emerge first or second in the Uttar
Pradesh election, to join and rescue its coalition.

Many in Congress see 41-year-old Rahul Gandhi as the answer
to the party's troubles. If he delivers a strong result in the
Uttar Pradesh election, pressure could mount on him to take the
reins of the party sooner than his current long-game plan.

"If Congress does remarkably well in Uttar Pradesh, if he
can claim there's a Rahul wave, many would say that this is one
way of liberating themselves from this (telecoms) controversy,"
the insider said. "The argument would be: here's a young man
bringing votes back to the party and now it's time to give the
younger generation a chance."
(Editing by Nick Macfie)

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